CIA Cover-Up Thwarted FBI’s Nuclear Diversion Investigations

According to formerly top-secret and secret Central Intelligence Agency
files (PDF) released August 31 in response to a Freedom
of Information Act lawsuit (PDF), the agency’s long retention of key information
ultimately stymied two FBI investigations into the 1960s diversion of weapons-grade
uranium from a Pennsylvania-based government contractor into the Israeli nuclear
weapons program.

The Nuclear Materials and Equipment Corporation (NUMEC) was a nuclear fuel
processing company founded by legendary chemist Zalman Mordecai Shapiro and
financed by entrepreneur David Luzer Lowenthal. According to the Department
of Energy, during Shapiro’s reign at NUMEC, the company lost more weapons-grade
uranium – 337 kilograms
after accounting for losses – much of a particularly unique and high enrichment
level than any other U.S. facility. Losses only returned to industry norms after
Shapiro, who later unsuccessfully tried to get a job working on advanced hydrogen
bomb designs, was forced out of NUMEC.

In the 1950’s Shapiro developed vital breakthroughs for US Navy nuclear propulsion
systems. In the 1940s Lowenthal fought in Israel’s War of Independence, serving as a smuggler who developed close
contacts with high Israeli intelligence officials.
An ardent supporter of Israel, Shapiro was Pittsburgh Chapter President of the
Zionist Organization of America. According to the Jerusalem Post, Shapiro later
joined the board of governors of the
Israeli Intelligence Heritage Center, an organization that honors spies
who secretly took action to advance Israel. NUMEC holding company Apollo Industries President Morton
Chatkin also held a ZOA leadership role while Apollo Executive Vice President
Ivan J. Novick went on to become ZOA’s national president. David Lowenthal,
who raised capital for acquiring NUMEC’s facilities (an old steel mill in the
center of the village) served as Apollo’s treasurer.

In 1968 CIA Director Richard Helms sent an urgent request for an investigation
to Attorney General
Ramsey Clark (PDF) stating "You are well
aware of the great concern which exists at the highest levels of this Government
with regard to the proliferation of nuclear weapons…It is critical for us
to establish whether or not the Israelis now have the capability of fabricating
nuclear weapons which might be employed in the Near East…I urge that the Federal
Bureau of Investigation be called upon to initiate a discreet intelligence investigation
of all source nature of Dr. Shapiro in order to establish the nature and extent
of his relationship with the Government of Israel." (PDF)

The FBI investigation
documented Shapiro’s many meetings with top Israeli nuclear weapons development
officials such as Avraham Hermoni and wiretapped
a conversation representative of the overall lack of concern over worker
safety and the environment by Shapiro and Lowenthal. The FBI discovered that
NUMEC had formed a joint venture with the Israel Atomic Energy Commission called
Isorad to supply food irradiators to Israel. The now-defunct Atomic Energy Agency
questioned Zalman Shapiro in 1969 – never asking if he had diverted material – over
his many meetings with Israelis known to the FBI to be intelligence
operatives. After the AEC defended Shapiro and
his continued holding of security clearances, the FBI terminated its intelligence
investigation.

In 1976 the Ford administration reopened the NUMEC investigation in order to
determine if a diversion had occurred and whether a government cover-up had
ensued. The 130-page release is replete with formal CIA denials to Congressional
Committee investigators, the GAO and the Nuclear Regulatory Commission inquiries
about whether the CIA had participated in any illegal diversions, or whether
it was aware of any presidential finding authorizing such an operation. Arizona
Democrat Morris Udall asked bluntly on August 23, 1977 “Is it possible that
President Johnson, who was known to be a friend of Israel, could have encouraged
the flow of nuclear materials to the Israelis?” Citing CIA’s role in alerting
the attorney general to the problem as evidence that it was not involved, the
agency also repeatedly emphasized “we in CIA are not and have not been concerned
with the law enforcement aspects of this problem. Indeed, Dick Helms turned
the matter over to the FBI in order to avoid such involvement.” Rather, exploring
the NUMEC-Israel link was part of CIA’s intelligence function to substantiate
why its National Intelligence Estimate concluded Israel had a nuclear arsenal.

FBI special agents soon lost morale over being sent unprepared into a second
investigation. The CIA, for its part, continued withholding critical information
that could have provided both motivation and a tool for confronting hostile
interviewees. This was according to the newly released CIA files “information…of
obvious importance in reaching an intelligence decision on the probability of
diversion, it is not of any legal pertinence to the FBI’s criminal investigation
of NUMEC. In our discussions with the FBI we have alluded to this information
but we have not made the details available to special agents from the Washington
Field Office of the FBI who are working on the case. While Mr. Bush’s [then-CIA
Director George H.W. Bush] conversations are not known to us, we have had no
substantive discussions with officials at FBI Headquarters on this matter.”
It was this sensitive CIA information, made available only to the president,
cabinet, and a limited number of top agency officials that led one National
Security Council staffer to conclude,
“I do not think that the President has plausible deniability.”

On June 6, 1977 Associate Deputy Director for Operations Theodore Shackley
briefed the FBI agents in charge of the NUMEC investigation. They grumbled
that since they had not established that the diversion took place, they could
not begin to address the second question about a cover-up. They then pleaded
for “new information” from the CIA, blithely ignorant that their reasoning was
completely backward – it was old information they required, and it was the CIA’s
withholding of it that was the true cover-up. The FBI also thought it needed
a NUMEC insider willing to blow the whistle in order to finally break the case
open.

Unknown to the FBI, every CIA director was complicit in withholding a key clandestine
operational finding from investigators. According to a May 11, 1977 report
by Shackley, the “CIA has not furnished to the FBI sensitive agent reporting…since
the decision was made by Directors Helms, Colby and Bush that this information
would not further the investigation of NUMEC but would compromise sources and
methods.”

Though carefully redacted from the CIA release, the omitted fact was likely
that highly enriched uranium of a signature unique to NUMEC had been detected
in Israel, a country that did not have facilities to enrich uranium. This sensitive information
(PDF) was delivered to former Atomic Energy Commissioner Glen Seaborg by two
Department of Energy investigators sifting for more facts about NUMEC in June
of 1978. It was powerful
enough evidence that the retired Seaborg subsequently refused to be interviewed
by less informed FBI investigators.

The CIA noted FBI investigators “indicated that even if they came up with a
case, it was extremely unlikely that Justice and State would allow it to come
to trial…they feel that they have been given a job to do with none of the tools
necessary to do it.” Although in 1981 special agents finally identified a former
NUMEC employee who had personally witnessed the means of the diversion – Zalman
Shapiro and other NUMEC officials stuffing
HEU canisters into irradiators (PDF) sealed and rushed to Israel – lacking
the missing CIA puzzle piece the FBI investigation went dormant as the statute
of limitations for Atomic Energy Act violations – punishable by death – finally
expired.